Another 781,000 troubled homeowners were in trial modifications, through March, officials said. Of these, 108,000 have been approved for permanent modification by servicers and are awaiting borrowers' acceptance.

So far, some 19.8% of trial modifications have become permanent, up from 15.5% a month ago. Overall, some 6.7% of the 3.4 million people estimated to be eligible for the program through 2012 have received long-term help.

While the number of people receiving permanent modifications is steadily growing, industry experts say the relentless foreclosure tide continues to threaten the program's effectiveness.

The administration has ramped up pressure on loan servicers to convert more trial modifications to long-term aid. But, some 13.5% of trial and permanent adjustments have been canceled, most often because borrowers did not make timely payments or return the necessary paperwork.

Wednesday's update comes on the heels of a government watchdog report that said the president's plan will fall short of its goal to help up to 4 million people avoid foreclosure. Nearly 200,000 foreclosure proceedings are started each month, according to the Congressional Oversight Panel.

"For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes," the panel said of the administration's Home Affordable Modification Program. "It now seems clear that Treasury's programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble."

Shifts in the program

The administration's foreclosure-prevention program reduces eligible borrowers' monthly payments to 31% of their pre-tax income. Participants typically have their loans reduced by $512, or 36%.

Before borrowers receive long-term help, they are put in trial modifications, a review period during which banks check whether borrowers can make the reduced payments and gather the necessary paperwork to verify income and hardship.

Servicers have complained that borrowers are not turning in the required documentation, slowing down the approval process; homeowners say banks are losing the paperwork they send in. Starting in June, borrowers will have to supply the needed documents before they can be put into a trial modification.

Responding to concerns that the loan-modification effort is not helping enough people at risk of foreclosure, the administration has made a series of changes to the program.

It has rolled out initiatives aimed at: the unemployed; those who owe more than their homes are worth; and borrowers with second liens. Also, the government is funneling $2.1 billion to housing agencies in 10 states where home prices have dropped significantly. And, the administration has set up a program to encourage short sales, where servicers allow borrowers to sell their homes for less than the value of their mortgage.

The Obama administration last month required banks to consider principal reduction as a way to modify home loans to an affordable monthly payment, but did not require that they actually lower the mortgage balance. Though consumer advocates say both these steps are critical, banks have moved slowly on both these fronts.

At a Congressional hearing on Tuesday, lawmakers grilled bank executives about their efforts to modify second liens and to reduce principal. Officials from Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) told representatives that they support such initiatives, but on a limited scale.

"There are certainly individual cases or even segments of borrowers where principal reduction may be appropriate," said David Lowman, chief executive officer for home lending at JPMorgan Chase. But "broad-based principal reductions could result in decreased access to credit and higher costs for consumers, because lenders will price for principal forgiveness risk."